Interactive Intelligence Reports First-Quarter 2013 Financial Results *Total orders up 31 percent from 2012 first quarter. *Cloud-based orders increased 42 percent to 31 percent of total orders. *Total revenues up 39 percent to $73.2 million. Business Wire INDIANAPOLIS -- May 6, 2013 Interactive Intelligence Group Inc. (Nasdaq: ININ), a global provider of unified IP business communications software and services, has announced financial results for the first quarter ended March 31, 2013. “During the first quarter of 2013, we had solid order growth in all our geographies and booked twice as many orders greater than $250,000 as we did in the first quarter last year,” said Interactive Intelligence founder and CEO, Dr. Donald Brown. “Our year-over-year revenue growth further highlights our ongoing traction with some of the world’s largest global companies as they adopt our technology with on-premises deployments or by joining the move to the cloud. The rapid growth of our cloud-based orders and revenues continued to enhance the scale of our overall recurring revenues. We will continue to make those investments that drive growth in market share, particularly with our cloud-based offering, which remains the highest growth segment of our market.” Brown added: “We remain committed to innovation and extending our product capabilities, as evidenced by the recent launch of our cloud-based product for small contact centers. Looking forward, we are confident in our long-term strategy to expand our cloud business, thereby increasing our recurring revenues and consistently gaining market share.Based on our strong global pipeline, we are maintaining our 2013 total order growth forecast of 20 percent, with cloud-based orders expected to represent approximately half of total orders.” First-Quarter 2013 Financial Highlights: *Orders: Total orders increased by 31 percent from the first quarter of 2012, while cloud-based orders were up 42 percent over the first quarter of 2012 and comprised 31 percent of total orders. The company signed 39 contracts over $250,000, which included eight orders over $1 million, up from 17 orders over $250,000, including six orders over $1 million in the first quarter of 2012. *Revenues: Total revenues were $73.2 million, an increase of 39 percent over the first quarter of 2012. Recurring revenues, which include both maintenance and support from perpetual license agreements and cloud-based revenues, increased 22 percent to $33.8 million and accounted for 46 percent of total revenues. Cloud-based revenues increased 42 percent to $7.1 million. Product revenues were $28.0 million and services revenues were $11.4 million, up 44 percent and 101 percent, respectively, compared to the first quarter of 2012. During the first quarter of 2013, product revenues benefited from partial revenue recognition of a large order signed during the fourth quarter of 2012. *Total Deferred Revenues: Deferred revenues increased to $110.2 million as of March 31, 2013, from $77.8 million as of March 31, 2012. In addition, the amount of unbilled future cloud-based revenues as of March 31, 2013 increased to $95.8 million from $40.6 million at the end of the 2012 first quarter. The combination of deferred revenues and unbilled future cloud-based revenues was $206.0 million, up 74 percent from $118.4 million as of March 31, 2012. *Operating Income: GAAP operating income was $3.4 million for the first quarter of 2013, compared to $276,000 in same quarter last year. Non-GAAP* operating income was $6.2 million for the first quarter of 2013, with a non-GAAP operating margin of 8.5 percent, compared to $2.4 million and 4.6 percent, respectively, in the first quarter of 2012. *Net Income: GAAP net income for the first quarter of 2013 was $1.5 million, or $0.07 per diluted share based on 20.7 million weighted average diluted shares outstanding, and included a tax credit related to 2012 research and development of $600,000. These results compare to GAAP net income for the same quarter in 2012 of $189,000, or $0.01 per diluted share based on 20.0 million weighted average diluted shares outstanding. Non-GAAP net income for the first quarter of 2013 was $3.6 million, or $0.17 per diluted share, compared to non-GAAP net income of $1.9 million, or $0.09 per diluted share for the same quarter in 2012. *Cash, Cash Equivalents, and Investments: As of March 31, 2013, we had cash, cash equivalents, and investments of $81.9 million. *Cash Flows: The company used $1.0 million in cash flow for operating activities in the first quarter of 2013 and $3.6 million for capital expenditures, which included expansion of its cloud infrastructure, and received $5.7 million from the exercise of stock options. * A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included with this press release. An explanation of these measures is also included below under the heading “Non-GAAP Measures.” Additional First-Quarter 2013 and Recent Highlights: *Interactive Intelligence launched CaaS Small Center℠, a new cloud solution designed to give contact centers with under 50 agents a simple, cost-effective way to access the same sophisticated communications applications as the largest global centers. *Interactive Intelligence released an enhanced version of its Bay Bridge Decisions^™ contact center forecasting, capacity planning and analysis product suite, which was designed to help customers reduce costs and improve service. *Interactive Intelligence purchased the customer support agreements of Amtel Communications Ltd., its New Zealand-based reseller, effective April 1, 2013. Interactive Intelligence will host a conference call today at 4:30 p.m. Eastern time (EDT) featuring Dr. Brown and the company's CFO, Stephen R. Head. A live Q&A session will follow opening remarks. To access the teleconference, please dial 1 877.324.1969 at least five minutes prior to the start of the call. Ask for the teleconference by the following name: “Interactive Intelligence first-quarter earnings call.” The teleconference will also be broadcast live on the company's investor relations' page at http://investors.inin.com. An archive of the teleconference will be posted following the call. About Interactive Intelligence Interactive Intelligence Group Inc. (Nasdaq: ININ) is a global provider of contact center, unified communications, and business process automation software and services. The company's unified IP business communications solutions, which can be deployed on-premises or via the cloud, are ideal for industries such as financial services, insurance, outsourcers, collections, and utilities. Interactive Intelligence was founded in 1994 and has more than 5,000 customers worldwide. The company is among Forbes Magazine's 2011 Best Small Companies in America and Software Magazine's 2012 Top 500 Global Software and Service Providers. It employs approximately 1,400 people and is headquartered in Indianapolis, Indiana. The company has offices throughout North America, Latin America, Europe, Middle East, Africa and Asia Pacific. Interactive Intelligence can be reached at +1 317.872.3000 or email@example.com; on the Net: www.inin.com. Non-GAAP Measures The non-GAAP measures shown in this release include revenue which was not recognized on a GAAP basis due to purchase accounting adjustments and exclude non-cash stock-based compensation expense, the amortization of certain intangible assets related to acquisitions by the company and non-GAAP income tax expense. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included with the financial information included in this press release. These measures are not in accordance with, or an alternative for, GAAP and may be different from non-GAAP measures used by other companies. Stock-based compensation expense and amortization of intangibles related to acquisitions are non-cash and non-GAAP income tax expense is pro forma based on non-GAAP earnings. Management believes that the presentation of non-GAAP results, when shown in conjunction with corresponding GAAP measures, provides useful information to management and investors regarding financial and business trends related to the company's results of operations. Further, management believes that these non-GAAP measures improve management's and investors' ability to compare the company's financial performance with other companies in the technology industry. Because stock-based compensation expense, non-GAAP income tax expense amounts and amortization of intangibles related to acquisitions can vary significantly between companies, it is useful to compare results excluding these amounts. Management also uses financial statements that exclude stock-based compensation expense, non-GAAP income tax amounts and amortization of intangibles related to acquisitions for its internal budgets. Forward Looking Statements This release may contain certain forward-looking statements that involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially are the following: rapid technological changes in the industry; the company's ability to maintain profitability; to manage successfully its growth; to manage successfully its increasingly complex third-party relationships resulting from the software and hardware components being licensed or sold with its solutions; to maintain successful relationships with certain suppliers which may be impacted by the competition in the technology industry; to maintain successful relationships with its current and any new partners; to maintain and improve its current products; to develop new products; to protect its proprietary rights adequately; to successfully integrate acquired businesses; and other factors described in the company's SEC filings, including the company's latest annual report on Form 10-K. Interactive Intelligence is the owner of the marks INTERACTIVE INTELLIGENCE, its associated LOGO and numerous other marks. All other trademarks mentioned in this document are the property of their respective owners. Interactive Intelligence Group, Inc. Condensed Consolidated Statements of Operations and Comprehensive Income (in thousands, except per share amounts) (unaudited) Three Months Ended March 31, 2013 2012 Revenues: Product $ 27,991 $ 19,435 Recurring 33,827 27,639 Services 11,420 5,694 Total revenues 73,238 52,768 Costs of revenues: Product 7,878 5,652 Recurring 10,142 7,240 Services 7,861 4,233 Amortization of intangible assets 49 35 Total cost of revenues 25,930 17,160 Gross profit 47,308 35,608 Operating expenses: Sales and marketing 23,292 17,763 Research and development 12,524 10,380 General and administrative 7,614 6,888 Amortization of intangible assets 463 301 Total operating expenses 43,893 35,332 Operating income 3,415 276 Other expense: Interest income, net 199 182 Other expense (1,402 ) (184 ) Total other expense (1,203 ) (2 ) Income before income taxes 2,212 274 Income tax expense 755 85 Net income $ 1,457 $ 189 Other comprehensive income: Foreign currency translation adjustment $ 105 $ 381 Net unrealized investment gain (loss) - net of tax (32 ) 160 Comprehensive income $ 1,530 $ 730 Net income per share: Basic $ 0.07 $ 0.01 Diluted 0.07 0.01 Shares used to compute net income per share: Basic 19,704 19,099 Diluted 20,738 20,020 Interactive Intelligence Group, Inc. Reconciliation of Supplemental Financial Information (in thousands, except per share amounts) (unaudited) Three Months Ended March 31, 2013 2012 Recurring revenue, as reported $ 33,827 $ 27,639 Purchase accounting adjustments 85 130 Non-GAAP recurring revenue $ 33,912 $ 27,769 Recurring revenue gross profit as reported $ 23,685 $ 20,399 Purchase accounting adjustments 85 130 Non-cash stock-based compensation expense 166 122 Non-GAAP recurring revenue gross profit $ 23,936 $ 20,651 Non-GAAP recurring revenue gross margin 70.6 % 74.4 % Services revenue gross profit as reported $ 3,559 $ 1,461 Non-cash stock-based compensation expense 48 34 Non-GAAP services revenue gross profit $ 3,607 $ 1,495 Non-GAAP services revenue gross margin 31.6 % 26.3 % Total revenue, as reported $ 73,238 $ 52,768 Purchase accounting adjustments 85 130 Non-GAAP total revenue $ 73,323 $ 52,898 Gross Profit, as reported $ 47,308 $ 35,608 Purchase accounting adjustments 85 130 Operating expenses 49 35 Non-cash stock-based compensation expense 214 156 Non-GAAP gross profit $ 47,656 $ 35,929 Non-GAAP gross margin 65.0 % 67.9 % Operating income, as reported $ 3,415 $ 276 Purchase accounting adjustments 611 588 Non-cash stock-based compensation expense 2,170 1,579 Non-GAAP operating income $ 6,196 $ 2,443 Non-GAAP operating margin 8.5 % 4.6 % Interactive Intelligence Group, Inc. Reconciliation of Supplemental Financial Information (in thousands, except per share amounts) (unaudited) Three Months Ended March 31, 2013 2012 Net income, as reported $ 1,457 $ 189 Purchase accounting adjustments: Increase to revenues: Recurring 85 130 Reduction of operating expenses: Customer Relationships 418 256 Technology 49 35 Non-compete agreements 45 45 Acquisition Costs 14 122 Total 611 588 Non-cash stock-based compensation expense: Cost of recurring revenues 166 122 Cost of services revenues 48 34 Sales and marketing 807 533 Research and development 616 397 General and administrative 533 493 Total 2,170 1,579 Non-GAAP income tax expense adjustment (640 ) (501 ) Non-GAAP net income $ 3,598 $ 1,855 Diluted EPS, as reported $ 0.07 $ 0.01 Purchase accounting adjustments 0.03 0.03 Non-cash stock-based compensation expense 0.10 0.08 Non-GAAP income tax expense adjustment (0.03 ) (0.03 ) Non-GAAP diluted EPS $ 0.17 $ 0.09 Interactive Intelligence Group, Inc. Condensed Consolidated Balance Sheets (in thousands) March 31, December 31, 2013 2012 Assets (unaudited) Current assets: Cash and cash equivalents $ 41,793 $ 45,057 Short-term investments 26,940 23,816 Accounts receivable, net 79,211 68,409 Deferred tax assets, net 17,031 16,600 Prepaid expenses 21,319 15,565 Other current assets 6,523 5,958 Total current assets 192,817 175,405 Long-term investments 13,143 11,757 Property and equipment, net 27,867 26,816 Goodwill 38,244 38,723 Intangible assets, net 21,890 22,676 Other assets, net 5,868 6,419 Total assets $ 299,829 $ 281,796 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 7,693 $ 8,796 Accrued liabilities 18,470 23,008 Accrued compensation and related expenses 9,893 13,640 Deferred product revenues 12,831 5,999 Deferred services revenues 72,013 67,893 Total current liabilities 120,900 119,336 Long-term deferred revenues 25,331 18,000 Other long-term liabilities 216 343 Total liabilities 146,447 137,679 Shareholders' equity: Preferred stock - - Common stock 198 194 Additional paid-in-capital 141,090 133,359 Accumulated other comprehensive loss (602 ) (675 ) Retained earnings 12,696 11,239 Total shareholders' equity 153,382 144,117 Total liabilities and shareholders' equity $ 299,829 $ 281,796 Interactive Intelligence Group, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) Three Months Ended March 31, 2013 2012 Operating activities: Net income $ 1,457 $ 189 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 2,608 2,150 Amortization 482 371 Other non-cash items 708 (470 ) Stock-based compensation expense 2,170 1,579 Tax benefits from stock-based payment (363 ) (70 ) arrangements Deferred income tax (1,553 ) (163 ) Amortization (accretion) of investment premium (270 ) 112 (discount) Loss on disposal of fixed assets - 25 Changes in operating assets and liabilities: Accounts receivable (10,802 ) 5,771 Prepaid expenses (5,754 ) (394 ) Other current assets (565 ) (154 ) Other assets 1,685 158 Accounts payable (768 ) (1,188 ) Accrued liabilities (4,562 ) (1,785 ) Accrued compensation and related (3,747 ) (2,835 ) expenses Deferred product revenues 6,839 518 Deferred services revenues 11,444 605 Net cash provided by (used in) operating (991 ) 4,419 activities Investing activities: Sales of available-for-sale investments 8,911 21,908 Purchases of available-for-sale investments (13,200 ) (21,300 ) Purchases of property and equipment (3,569 ) (2,569 ) Acquisitions, net of cash - (7,042 ) Unrealized loss on investment 17 - Net cash used in investing activities (7,841 ) (9,003 ) Financing activities: Proceeds from stock options exercised 5,704 1,777 Proceeds from issuance of common stock 400 141 Employee taxes withheld for restricted stock units (899 ) (253 ) Tax benefits from stock-based payment arrangements 363 70 Net cash provided by financing activities 5,568 1,735 Net decrease in cash and cash equivalents (3,264 ) (2,849 ) Cash and cash equivalents, beginning of period 45,057 28,465 Cash and cash equivalents, end of period $ 41,793 $ 25,616 Cash paid during the period for: Interest $ 4 $ - Income taxes 6,764 2,094 Other non-cash item: Purchases of property and equipment payable at end 20 234 of period Supplemental Data (Dollars in thousands) (unaudited) 2012 2013 Q1 Q2 Q3 Q4 Total Q1 Margins (GAAP): Product 70.9 % 69.5 % 73.4 % 75.2 % 72.5 % 71.9 % Recurring 73.8 % 72.4 % 72.3 % 72.7 % 72.8 % 70.0 % Services 19.7 % 22.6 % 18.9 % 33.5 % 24.8 % 31.2 % Overall 66.8 % 65.2 % 65.6 % 67.9 % 66.5 % 64.6 % Year-over-year Revenue Growth (GAAP): Product -4.8 % -18.8 % 3.3 % 2.5 % -4.5 % 44.0 % Recurring 31.1 % 27.2 % 17.9 % 31.5 % 26.8 % 22.4 % Services -8.4 % 23.5 % 34.7 % 71.7 % 30.0 % 100.6 % Overall 10.6 % 5.4 % 13.7 % 22.3 % 13.3 % 38.8 % Orders: Over $1 6 8 9 19 42 8 million Between $250,000 11 28 28 49 116 31 and $1 million Number of new 60 67 65 110 302 74 customers Average new customer order: Overall $ 240 $ 349 $ 409 $ 623 $ 440 $ 335 Cloud-based 761 557 822 1,134 866 788 ININ-G Contact: Interactive Intelligence Stephen R. Head, Chief Financial Officer, +1-317-715-8412 firstname.lastname@example.org OR ICR, Inc. Seth Potter, Investor Relations, +1-646-277-1230 email@example.com OR Interactive Intelligence Christine Holley, Senior Director of Market Communications, +1-317-715-8220 firstname.lastname@example.org
Interactive Intelligence Reports First-Quarter 2013 Financial Results
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